Did you know that only about 20-30% of businesses that go to market actually sell?
For business owners who've spent decades building their company, this statistic is understandably alarming. Your business likely represents your largest asset and your retirement security.
Yet, 80-88% of businesses do not sell.
The result? Many disappointed business owners, possibly upended retirements, and altered financial plans.
But why don't most businesses sell? The answer isn't what you might expect.
The Three Deal Killers That Can Destroy Business Sales
After years of working with business owners as a Certified Exit Planning Advisor, I've seen the same issues derail sales repeatedly:
Many businesses do not sell due to:
1. Owner Dependence: Your Business Can't Run Without You
Owner dependence results in businesses that are not built to be transferable or viable in the long term, as our lives are finite. It's not personal, it's business. How many times have we heard this? Yet most business owners do not practice this key principle.
Remember, you are not selling yourself or a job; you are selling a business. You are selling a proven, repeatable process. Buyers want to purchase a business that runs without you.
Ask yourself this: If you take a three-month vacation starting tomorrow, would your business still run smoothly without you?
A nonexistent or weak leadership team and subpar management practices are not attractive to buyers.
2. No Life After Business: The Personal Planning Gap
An owner's mindset is also critical. The wrong mindset can collapse deals. Deal-killing doubts can happen when the owner gets cold feet or realizes they have no life plan—no "life after business."
Here's what many don't realize: Lack of personal planning kills just as many deals as poor financials.
3. "Your Baby Is Ugly": The Overvaluation Problem
I love the title of Justin Goodbread's book, Your Baby’s Ugly: Maximize the Value of Your Business or You'll Have Nothing to Sell. For many business owners, this is very true—your baby is ugly.
Owners often overvalue their business, confusing emotional value with market value. Many owners believe their company is worth more than double what buyers are willing to pay for it. The deal falls apart when the owner refuses to accept the realities of the market.
When was the last time you had your business independently valued—not by what you think it's worth, but by what the market would actually pay?
Understanding your true business value is just the starting point. If you’re interested in reading more on this topic, my colleague Adam Freeland has written extensively about how business owners can systematically increase their company's valuethrough what's called the Five Stages of Value Maturity framework.
But before you can build value, you need to honestly assess where you stand today.
Financial Red Flags That Scare Away Buyers
Financials can be another deal killer. Many small and mid-sized businesses use tax minimization strategies that undermine profitability. The business may be a lifestyle business that effectively supports the lifestyle of the business owner and their family. Key factors, such as working capital, documented profitability, EBITDA, and growth trajectory, may be low and unsustainable for a new owner.
Additionally, if revenue streams are not diversified—if 20-40% of revenue comes from one client—this is a considerable risk, and buyers worry: what if that client leaves after the sale?
Remember: Buyers pay for future cash flow, not past success. Flat or declining revenue is a red flag. A business with no clear growth plan in sight is an unattractive investment.
The Mountain Climbing Reality: Why the Odds Are Stacked Against You
When I think of business owners trying to sell their business, I think of climbing Mount Everest. Only about 60% of climbersattempting to climb Mount Everest actually get to the summit. 40% fail to reach the top. and 1% of climbers die.
The success rate depends on physical and mental health, climate, remoteness, landscapes, and location.
Yet selling a business is statistically harder than climbing the world's deadliest mountains. Only 20-30% of business owners successfully complete their sale. Would you build your retirement plans on these odds?
Just like climbing mountains, taking your business to market isn't just a listing—it is an expedition requiring preparation, support, and resilience. Without this, the odds are stacked against you.
A Better Path Forward: The Exit Planning Advantage
As Certified Exit Planning Advisors, Adam Freeland and I specialize in identifying and fixing these issues before you go to market. We help business owners:
- Build systems that operate independentlyof the owner
- Create realistic valuation expectationsbased on market data
- Develop comprehensive personal financial plansfor life after business
- Strengthen financial positionsto attract serious buyers
- Diversify revenue streams to reduce buyer risk
Our goal? Achieve a successful sale that provides enough liquidity to cover your retirement income needs, giving you true financial freedom and peace of mind.
Don't Wait to Find Out Your Business Isn't Sellable
Would your business sell today if it went to market? Let's pressure-test this now, in a safe environment, so you can fix issues while there is still time.
If you're a business owner reading this, consider this your wake-up call. The statistics are sobering, but they don't have to be your reality.
Ready to beat the odds and make your business sellable? Get in touch with our team at Harford Financial Grouptoday to learn how we can help you prepare for a successful exit.
If you care about a business owner, forward this article. It could be the catalyst that sets them up for future success instead of disappointment.